Watching TV on a mobile phone has proved less of a turn-on for British consumers than the telecoms industry had hoped, with Virgin Mobile understood to have sold fewer than 10,000 handsets for its mobile TV service, despite a major advertising campaign.

Virgin Mobile, part of the cable group NTL, launched the UK's first broadcast TV service for mobile phones in October with a £2.5m push fronted by the former Baywatch star Pamela Anderson. But despite recently cutting the price of the one handset that can receive the service, called the Lobster phone, it has not been a hit.

The mobile phone operators have been looking to mobile TV as a new way of making money in the face of fierce competition in their core markets of voice calls and text messaging. Companies such as Vodafone, 3 and Orange have been using their existing 3G mobile networks to transmit video to individual handsets. Ultimately, however, the industry wants to broadcast a pared-down version of traditional TV through one nationwide network that any handset with the right kit can receive.

Virgin Mobile TV - or VMTV - was the first such "broadcast" service. It is backed by BT Movio, part of BT, and uses the digital radio spectrum to broadcast TV. Viewers can watch simulcasts of BBC1, ITV1, Channel 4 and E4 as well as ITN news. Customers willing to sign up for a monthly contract of £25 or more get the phone and TV for free.

Pre-pay customers, meanwhile, get TV free for the first 90 days and then must spend £5 a month to keep watching. Virgin Mobile recently dropped the price of the handset - made by the far eastern manufacturer HTC - from £199.99 to just £99 for pre-pay customers.

Industry insiders say Virgin Mobile has signed up "significantly" fewer than 10,000 customers. The operator's chief executive, Alan Gow, refused to give a figure but said mobile TV was still in its infancy and sales had been hampered by the fact there is only one handset on offer.

"Handsets are a fashion device and become unfashionable fairly rapidly and this one is approaching the end of its cycle," he said.

Virgin Mobile hopes to have a range of new mobile TV handsets later this year. It is also looking to introduce new services such as allowing people to download and store TV programmes on the device for viewing while in areas that are out of coverage - such as on the London Underground.

Rival networks, however, maintain that the problem with VMTV is its range of channels is too small. The results of Virgin Mobile's own consumer trials in London, for instance, showed triallists watched an average of 66 minutes of television a week. Its rival O2 carried out a trial of a service with 16 channels in Oxford and its users watched a weekly average of four hours of mobile TV.

The O2 trial used a different technology to Virgin Mobile called DVB-H. While there is currently no spectrum in the UK that could be used to broadcast the signal, the five UK networks - 3, O2, Orange, T-Mobile and Vodafone - are looking to form a consortium to bid for part of the airwaves to be freed up by the switch-off of the analogue TV signal. Known as channel 36, this slice of spectrum could run DVB-H and be available by 2008.